16 April 2007

Is money really as essential to New Zealand politics as is commonly assumed? Proponents of reform often speak as if there is credible evidence to show that money has a huge impact on the outcome of elections. There appears to be very little evidence in the party literature to show that the greater expenditures of money produces greater electoral success. The effectiveness of advertising for political parties is especially questionable. [Read more below]

Jeff Gamlin has commented that the ‘Conventional wisdom about the influence of election campaigns tends to be confined to the extent to which they confirm an already established trend’ (Gamlin, 1999f: p.22). In their extensive study of whether increased party spending at the national level has been electorally significant in British election between 1959 to 1994, James Forrest and Gary Marks concluded that ‘campaign advertising has a reinforcing rather than a persuading role for the stable voter but a persuading or at least guiding role for the volatile voter’ (Forrest and Marks, 1999: p.100).

Party finance expert Justin Fisher also analysed annual data from 1959 to 1994 in order to answer the question of whether increased party spending at the national level is electorally significant. He found ‘that there is insufficient evidence wholly to support this proposition’, concluding that ‘party spending at national level may not be as effective in electoral terms as is often suggested’ (Fisher, 1999a: pp.519, 530).

Obviously a party that has ample capital resources has some degree of advantage over its opponent that has fewer. And there is no doubt that these financial resources can be employed in very effective ways in which labour resources can not. However, some good arguments might be made that these resources are over-rated and an over-reliance on them might in fact be a handicap.

The bestselling economics book, Freakonomics
by Steven Levitt and Stephen Dubner has a section on the quickly
diminishing marginal returns of election campaign spending. In this,
they disprove the widely-held truism that 'money buys elections'. First
they admit that there is a correlation between money and politics:
those candidates or parties that spend the most often win. But they
dispute the commonly held assumption that the spending causes the win.
Instead they point out that anticipated win - or possible win - will
often attract the campaign money. When candidates obtain large amounts
of money it is usually because they are seen to be the best candidate
or the one mostly likely to win. Based on Levitt's study of campaign
spending by the same candidates against the same competitors over
decades of US congressional elections, it was found that 'the amount of
money spent by the candidates hardly matters at all. A winning
candidate can cut his spending in half and lose only 1% of the vote.
Meanwhile, a losing candidate who doubles his spending can expect to
shift the vote in his favor by only that same 1%'. The Freakonomics
authors conclude that campaign spending has a very small impact on
election outcomes, regardless of who does the spending.

Over the next few weeks I'll try to update this posting with some further academic evidence for and against the idea that money is of huge significance in elections.

Comments

Is money really as essential to New Zealand politics as is commonly assumed? Proponents of reform often speak as if there is credible evidence to show that money has a huge impact on the outcome of elections. There appears to be very little evidence in the party literature to show that the greater expenditures of money produces greater electoral success. The effectiveness of advertising for political parties is especially questionable. [Read more below]